Investigators from the Royal Canadian Mounted Police and the U.S. Secret Service have arrested two men who allegedly tried to pass off $25 billion in counterfeit American bearer bonds at a Toronto bank.
The $100 million bonds, which can be cashed by the bearer because they are not registered by ownership, were taken to the Canadian Imperial Bank of Commerce. The men tried to pass them off as recently discovered notes issued in 1934.
But the counterfeit bonds were so full of errors that bank officials immediately spotted them as fake, Tim Koerner, a U.S. Secret Service agent based in Buffalo, said at a news conference in Toronto.
Koerner noted many glaring errors on the bogus 1934 bonds, including a listing of the Treasury Office ZIP code (ZIP codes were introduced the 1960s), the signature of Donald Reagan as treasury secretary (he served in the 1980s), and the fact the United States has never issued bearer bonds worth $100 million.
He noted that governments use bonds to borrow money to pay off public debt and that the entire U.S. debt in 1934 was just $30 billion.
This "huge sum of money is definitely something that would raise flags to a financial institution," he said.
It is fortunate "you can't go in to the local Quickmart or 7-Eleven and attempt to buy a pack of cigarettes with a $100 million bearer bond," he added.
Michael Johnson, 37, of Toronto, and Sung Taek Park, 67, of Japan, were arrested last week and charged with fraud.
Constable Michael Cote of the Royal Canadian Mounted Police said the case may be the biggest fraud yet uncovered in Canada.
Last year, U.S. prosecutors accused a Utah auto mechanic of trying to redeem a $100 million Federal Reserve bearer bond from 1934. But prosecutors noted the Federal Reserve's largest bearer bond is just $1 million.
Koerner said the fake bonds seized in Toronto "weren't worth the paper they were printed on."
Though there was some risk ordinary people might be fooled by the phony bonds, he said, "there was no risk to the U.S. Treasury" because these counterfeits would have been quickly discovered.